Local Online Ad Spend to Rise 46 Percent in '05 from ClickZ summarizes a Borrell Associates report on 210 US media markets predicting that online ad spend will rise from $2.7 billion last year to $3.9 billion in 2005, a 46 percent increase.
Daily newspapers grew the most last year, with online yellow pages spending slower. Why? Money may be going to the major search engines like Google and Overture that offer local ad targeting, rather than online yellow pages. Quoting out of the report, which you can request here:
Some of the pure-play companies offering targeted local advertising also picked up share. But Internet Yellow Pages appeared to have slipped, perhaps seeing their results cannibalized by Paid Search. More analysis will be offered in early March when we complete our annual survey of local Internet media.
And the report also has this on paid search:
Paid Search averages 8.4% of all locally spent online advertising. This is the first year we are tracking Paid Search spending by local advertisers. Our projection for 2005 is $329.5 million. Without Paid Search, local markets would see a 33.8% increase this year.
What will drive growth this year? More people being online; proof from previous spending that local ads online work and all the online local media companies deluging local merchants with information about their opportunities and programs.